Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.

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I understand a lot of you were on spring break last week. Or, if we’re to be honest about it: your kids were on spring break, which means you now need a separate vacation so you can actually relax. But instead you’re back in the office and navigating an overflowing inbox.

To that end, I’ll keep this newsletter light. There’s just one rambling bit at the beginning and then three short segments.

Is it already out of style?

The second annual Metaverse Fashion Week (MFW), the online gathering of fashion brands and fans, took place at the end of March. I’d intended to cover this one in last week’s newsletter but ran out of space. Besides, I figured there’d be more coverage of the event after it had wrapped.

The involvement of so many big-named brands hinted that MVFW would have a strong showing. But when the doors finally opened … Well, while it wasn’t full-on “crickets” (like a certain party I mentioned a few months back) attendance was just a fraction of the 2022 event. A fraction of one-fourth, really: around 26 thousand people wandered Decentraland this year as part of MVFW, compared to more than 100 thousand the year prior.

Part of this decline, I’m sure, stems from web3 losing its novelty. NTFs aren’t fully mainstream yet but nor are they these magical items that only celebrities buy.

Then there’s the venue. Decentraland, being a pure web3 play, likely faces guilt by association because of all the cryptocurrency scandals and meltdowns. Web3’s soiled reputation may have made the so-called “web 2.5” properties – those that aren’t completely built on blockchain – more popular:

As a matter of comparison, popular gaming platforms like Roblox and Fortnite boast tens of millions of users daily. Roblox reported it had more than 58 million daily users during the last quarter of 2022. Fortnite’s daily active users surpassed 34 million last year.

And maybe … maybe the web 2.5 properties are just … more fun?

Decentraland’s gameplay, design and reliability have all been criticized and may be why the platform is a disappointment for many.

“In practice it’s a bad video game made up of smaller, worse video games wrapped in real-estate scheme cosplaying as The Matrix,” said Dan Olson, an influencer who discusses a variety of issues on his YouTube channel called “Folding Ideas” that has more than 800,000 subscribers.

Ouch.

The event itself may have also contributed to the drop in attendance. One writer for The Verge noted that the first booth they entered – from Coach – was rather creative and engaging (in spite of some technical glitches). But that was an exception. The other booths felt “like virtual showrooms for digital outfits, and while some were interesting to look at, they were often quite boring and difficult to interact with.” Running a static display of merchandise is a very web2 practice. It’s as though these brands were focused on being in a metaverse, but not actually using that metaverse to its full, interactive, immersive capabilities.

Still, as the author of that Verge piece points out, not all is lost:

[S]elling digital clothes might not actually be the point. As BPM-PR CEO Monique Tatum tells me in an email, a virtual fashion show might have lower costs than a real-world fashion show and be more available to a wider audience. “Brand awareness is the name of the game, and these are not only fascinating concepts that get people talking but also something you do not need to leave the house to enjoy,” she says. And the digital nature of something like Metaverse Fashion Week means that events can more easily be repeated, which may not happen in the real world.

When you put it that way, this does sound like the brands get the point of a virtual event.

It’s similar to the way many conferences shifted to an online format after the onset of the Covid-19 pandemic. At first it felt odd to “participate” while sitting in your living room. Then you realized that you could … participate while sitting in your living room. Presenters? They got to record their talks in advance. (Speaking from experience: that saved me quite a bit of time on prep. And in one case I was able to address audience questions in the live-chat while my talk was rolling.) Plus, with pre-recorded talks, a conference organizer didn’t have to worry about shuffling a lineup due to a presenter’s flight being delayed.

So was this the same vibe as in-person gatherings? Not at all. And embracing what made virtual events different is what allowed all involved to appreciate the new format for what it was. Why try to recreate the old concept in the new space?

My hope is that future metaverse event planners take note.

(That said, it’ll be hard for them to top that fast-food wedding.)

Keep an eye on the quiet money

Despite the weather’s spring thaw, we’re apparently still deep into Crypto Winter™. Crypto got a little too spicy, too quickly, and now investors have grown shy.

There’s still some money flowing around the space, though. Consider some recent investments:

• Ledger makes hardware wallets, which give people an extra layer of security in managing their cryptocurrency tokens and NFTs. A couple of weeks ago, the company took on an additional $100 million in funding.
• LayerZero connects major blockchains. It recently raised $120M, fetching a $3 billion valuation in the process.
• Salesforce is creating infrastructure for companies to run NFT-based loyalty programs. (This is an indirect investment. Instead of a VC throwing money at a startup, Salesforce is throwing money at itself to build out this product offering.)

Point being: the money’s still there. It’s just a matter of where it’s going. And for now, it’s going into utility plays.

How Not To Run A Company, Part II

Remember FTX? They were involved in that massive crypto meltdown and scandal. No, I mean the other meltdown and scandal. No no… the one from last November. That one.

At the time, I read the initial findings of the new CEO and noted:

I hereby nominate “Declaration Of John J. Ray III In Support Of Chapter 11 Petitions And First Day Pleadings” for Diss Track of the Year 2022.

Well, 2023 is here and ol’ JJR3 has dropped a new one. “First Interim Report Of John J. Ray III To The Independent Directors On Control Failures At The FTX Exchanges” is, as the kids say, bangin’.

The document is a recap of what the restructuring team has found thus far. Emphasis on those last two words. I wager there is more to come.

I’m only partway through but It reads like a manual for How Not To Run A Company. (Here’s to hoping none of my due diligence reports come close.)

It’s just dodgy

That One Website hasn’t been the same since That Guy bought it. You know which one I mean.

I admit, I wasn’t (initially) part of the crowd that walked away just because he was in charge. I figured I’d stick with it, because, how bad could it be, right?

But then there were the changes. Sudden, sweeping changes which seemed to stem from either an inability or unwillingness to think things through. Some of which felt like … pranks, almost?

So when I noticed that the new Home button was an image of the Dogecoin dog, and then saw that the price of Dogecoin had since jumped 30%, I just thought … Yep. That Guy. That F**g Guy. Again.

The wrap-up

This was an issue of Block & Mortar.

Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.

Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.

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